Cops and Firefighters, Please Look Hard at Your Pension Fund
Cops and firefighters ought to be better equipped than most of us to look at the way their pension fund invested money and guess why it went wrong.
Peter Hermes Furian / Shutterstock
Of course Dallas cops and firefighters are furious over the public tone of the pension fund fight, because so much of it accuses the ordinary members of the fund of somehow being at the bottom of the debacle. All of the talk about pension fund millionaires, for example, makes it sound as if the city’s rank-and-file first responders are a bunch of grifters.
I think most of us know that’s stupid. It’s like saying I’m some kind of co-conspirator because Social Security is in trouble. It took me a full year and a letter to the White House to get my Social Security card replaced. That’s how much power I have. It’s about the same for members of the Dallas Police and Fire Pension System.
But before they assume that everybody is just out to get them — that we all hate cops and firefighters because we’re idiots — the honest members could also look back and ask themselves some very serious questions about the people who have been running that fund for them.
The questions the members of the fund need to be asking themselves are these: How did managers of the fund decide where to invest the fund’s money over the years? Who made the decisions, based on what? To this very day, are the board and the fund’s top management and consultants doing everything they can to clear the decks, or are they still trying to sit on secrets?
If they are still sitting on secrets, how good a position can the fund be in when it asks the taxpayers for help? I don’t know about firefighters, but I know most cops have pretty good noses for what I have sometimes heard described as the “anomalous response.”
That would be like you say, “Sir, do you have any firearms in the vehicle,” and I say, “None that I have been informed of.” That’s side-of-the-road get-out put-your-hands-on-the-car time, right? Right now.
Well, same thing if you tell the taxpayers the pension fund is short $3 billion or whatever, and the taxpayers ask, “How come?” If you say, “The Texas Public Information Act does not require me to answer your question,” we can’t make you get out and put your hands on your car. But we can say, “Ask us for more money again after you’re ready to answer our questions.”
Especially troubling in all of this are claims being made about the fund’s management in unresolved litigation (see below) between the fund and a forensic accountant, Sandy Alexander, with whom the fund has been doing battle for more than a decade. The fund hired Alexander in 2002 to gather evidence about an employee who had stolen money. They amended his contract to give him a broader investigative mandate, so that’s what he did.
But when Alexander began to delve deep into the way the system made its decisions about money, the pension fund cut the lock off his file cabinet at pension fund headquarters and made off with all of his files. Not good, right? Then they said all kinds of bad things about him to the media.
The fund wound up having to write a sick crow-eating letter to The Dallas Morning News basically apologizing for the untrue things that had been said to reporters about Alexander. The letter explained specifically that the board had not really fired Alexander, as someone had originally told the News. They just refused to extend his contract long enough for him to make his report. And Alexander had not actually refused to provide evidence to back up his report, because he hadn’t written the report yet.
So, look, just from a cop point of view, what does that look like to you? Here comes the professional forensic investigator whom the board has hired to go look for bad guys and trouble; he’s getting his evidence together; the top management of the fund takes a bolt-cutter to his file cabinet and then starts telling everybody he’s a burglar or something; then later the same people say it was all a big mistake and everybody should forget about it. Would you forget about it?
And, look, it’s fine to say this is all ancient history from more than a decade ago and who cares? Let’s just move on and take care of the current crisis, right? But that’s the problem: If you read Alexander’s counter-complaint (also below), you will see that the issues of honesty and transparency run right up into today and involve the current management of the system and members of the board.
I am not presenting Alexander’s claims here as fact. They are claims, nothing more. But they are backed up by a tremendous amount of supporting evidence that you can find on his webpage, dpfps.org.
Some of his evidence, for example, suggests that the pension system’s use of an outside law firm to investigate wrongdoing is a sham designed to do just the opposite — to make sure, instead, that no publicly discoverable documents or evidence will ever be produced.
But let’s go back to the top and ask again how anybody could think rank-and-file crime fighters and firefighters could be involved in a pension fund scam. I don’t think anybody does. What people may suspect, instead, is that some weak greedy people who were supposed to be stewarding the fund engaged instead in stupid behavior, some of which they may have been nudged into by powerful people in the community.
We need to stop and remember who it was who pushed the Dallas Police and Fire Pension Fund to invest in Museum Tower in the first place.
flickr / sky's the limit
Everybody talks about Museum Tower, the condo building in the arts district financed by the pension fund that the arts-maven crowd got mad at because they said the building’s reflectorized surfaces were wilting the grass at the Nasher Sculpture Center across the street. That was supposed to prove that cops and firemen were both anti-sculpture and anti-grass, always a leap for me.
But remember to ask: Who pushed the pension fund to finance that sucker? It was built at a time when nobody else was building anything at all downtown.
Then Mayor Tom Leppert couldn’t contain his glee when the pension fund was induced to pony up $200 million to get the dirt flying at Museum Tower. “In the end, what this says is Dallas was willing to invest in itself,” Leppert said at the groundbreaking. “This project’s going to make a difference to the community.”
Leppert said, “Rewind a couple of decades and think that this whole area was a used car lot. I believe there is going to be a lot of commercial development in this area, and business will move here.”
And that was all because the Dallas Police and Fire Pension Fund had the courage to bet $200 million on a downtown tower when nobody else would. In its coverage of the groundbreaking, The Dallas Morning News gushed about the fine firefighters we have here in Dallas, willing to bet the farm on a big shiny tower for rich people downtown.
“But the biggest VIP at the morning event was a firefighter named Gerald Brown. He’s the chairman of the Dallas Police and Fire Pension System, which is putting up $200 million in cash to build the 42-story downtown residential building.
“Museum Tower is all about the Dallas Police and Fire Pension System investing in Dallas,” Lt. Brown said at the groundbreaking. “After careful study, we think the timing is perfect to begin construction.”
The $3 billion pension fund decided to invest in the project after “thoroughly studying market conditions inside and out,” he said.
Isn’t that just the sweetest thing you ever read about a firefighter? And, please, I’m not dredging that up to make fun of the fund. Quite the opposite. I’m calling it up again, because I think police and fire officers can figure this out.
There were all kinds of slick-suited, smooth-haired dudes over there whispering in the fund’s ear about investment opportunities. Clearly the fund’s board and management did nothing at all to insulate themselves from that kind of influence. They not only should not have been having those conversations; they shouldn’t even have been making the investment decisions themselves, which should have been left entirely to arms-length professionals operating from behind an ethical firewall.
But none of it was done the right way. And the most disturbing thing in Alexander’s claims now is the suggestion that the basic culture of self-serving secrecy still has not changed.
So, members: Nobody on earth can spot a basic bad attitude quicker than you can. Take a hard look at the people who’ve been handling all that money for you all this time. See what you think.
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